Haleon, the Glaxo personal care products spin-off, is an increasingly attractive option in the over-the-counter products space, according to Credit Suisse.
Results this week from J&J Consumer Health’s arm are directly comparable to Haleon, adds the broker, with a 55% overlap.
Even though J&J’s consumer health growth slowed a little in its third quarter, OTC was still up by 13.7% led by an even better performance in the US.
Haleon releases its fourth quarter and final year 2022 results on 2nd March with Credit Suisse predicting organic sales growth of 3.7% and OTC growth of 5.0%.
Adding to the potential for improvement here, Credit Suisse believes the appetite for Haleon shares has increased sufficiently following the favourable Zantac ruling for GSK/Pfizer to consider unloading their residual holding.
Haleon also has balance sheet options of its own, notably the sale of a digestive health business worth around £4bn.
A disposal plus other M&A would allow Haleon to pencil in growth of 4% annually in the medium term and offer one of the most defensive portfolios (eg low private label share, problem-solving) in an economic downturn.
On an earnings discount to European rivals, 'outperform' is the investment rating with a share price target of 376p.